Business Formation Basics: Getting It Right from the Start
As the world around us changes, a growing number of entrepreneurs are presenting new ideas that will define tomorrow’s world. Behind the amazing success stories, practically all inventive business founders follow a set of basic steps to start their company.
Here are ten company formation fundamentals that will assist you in building and running a successful firm:
1. Create a business idea
This stage may appear to many as a no-brainer, but it’s a little more complicated than it appears. To define your business offer, you’ll need to do a lot of market research (analyzing relevant markets and target consumers) and a lot of brainstorming (writing down and elaborating your ideas).
2. Write the business plan
Make a proper business plan once you’ve decided on a business idea. This is a crucial stage because it will be the first thorough piece of literature about your business. Your company’s mission, vision, values, services, goods, business functions, customer service standards, planned revenue streams, and other critical elements are all detailed in the business plan.
3. Explore financing options
Laying out your finance choices is an important part of the company strategy because it will determine your path forward. Begin by compiling a complete list of all the funding options available to you. If you determine that your initial capital or personal funds are insufficient, you should consider different sources of funding, such as special funds, banks, financing institutions, partnerships, and other options.
4. Make a basic marketing strategy
You don’t need to hire a public relations firm or a social media guru at this point. However, you must begin to consider your marketing strategy. Define and analyze your target audiences’ profiles (gender, age, educational level, economic level, etc.): What are their names? What are their desires and needs? What do they eat and how do they eat it? What methods of communication do they prefer?
Choose which communication platforms and channels are most appropriate for your services or products, and research their specifics and prospective prices.
5. Decide on a legal business structure
Because of its operational flexibility, the Limited Liability Company (LLC) is the most widely used legal business form by small enterprises and entrepreneurs when establishing their companies in Dubai.
LLCs are allowed to trade throughout the UAE and the Gulf Cooperation Council (GCC). They also have various advantages, such as no minimum capital need and no restrictions on real estate ownership.
Sole proprietorships, civil companies, private shareholder companies, public shareholding companies, branch, and representative offices, and free zone companies are some of the other legal business formats used in the UAE.
6. Choose a business name and officially register it
This is the first official step for your business. In Dubai, you must choose a name that does not contain any objectionable words or connections to religion, politics, or criminality. In addition, your business name must be appropriate for your industry and available for usage. Once you’ve decided on a name, you must register it with the Department of Economic Development (DED). This protects your ownership rights and is a requirement for incorporating your business.
7. Gather the papers for the company's pre-and post-incorporation phases
Firm formation paperwork can never have too many documents. It’s preferable to have an incomplete file that may cause your business setup to be delayed if you make sure you’ve included everything in one deck.
The name registration certificate, copies of your passport and UAE residency, copies of any partnership or sponsorship agreements with a local agency or partner, and your company incorporation certificate, among other papers, will be required to be submitted.
Keep in mind that having a business setup specialist on your side can assist you in organizing your documentation and expediting the formal procedures.
8. Choose a location for your business
Finding the perfect location for your business is just as crucial as deciding on a name. It not only represents your brand, but also defines the accessibility, connectivity, reach, and activities of your organization. You will never be unable to find the ideal place in Dubai.
However, before you make your decision, keep in mind that while companies created in free zones enjoy several tax benefits, they are not permitted to trade elsewhere in the UAE.
Commercial properties for rent in Dubai or any place in the UAE can be found through online services such as Houzz, Property Finder, and Bayut.
9. Apply for a business license
If you want to start a business on Dubai’s mainland, you’ll need to apply for a business license with the Department of Economic Development (DED). The Free Zone Authority responsible for the zone you’re setting up your business in will be your reference point for Free Zone businesses. Your formal business permit is your business license. Your business becomes legitimate the moment you receive it.
10. Set up books for tax reporting
For start-ups, having an experienced accountant on board is essential. However, to manage your full bookkeeping duties, your accountant will need to use specialized software. QuickBooks, Quicken, and other accounting programs are examples.
Once you’ve decided on a program, give your accountant all of your bank statements, credit card statements, loan documents, lease contracts, receipts, and other financial records to ensure that your statistics are correct from the start.